Quinn pension plan could shift costs to schools

As Gov. Pat Quinn seeks to overhaul Illinois' public employee pension system, one of the more politically tricky elements also happens to be the one he's talking about the least.

The Democratic governor is calling on universities, community colleges and school districts across the state to pick up more of the tab for their workers' retirement costs after decades of relying on state government to pay.

It's a move supporters say could save the state billions of dollars but one critics argue would result in local property tax increases.

Quinn's proposal lacks specifics, but the idea has been gaining momentum among leading Democrats in Springfield who say Illinois can no longer afford to pay pension benefits for employees who do not work directly for the state.

For years, the state has paid the bulk of retirement expenses for university and school employees outside Chicago — an amount that has grown to more than $4 billion a year and represents about 78 percent of the state's yearly pension costs, according to Quinn's office.

The governor wants to shift much of that burden back to universities and school districts, a move he says would happen gradually over several years. It's unclear if Quinn wants schools to pick up the entire $4 billion or a lesser amount.

"We haven't come to the final solution there, we're still negotiating that," Quinn said Friday as he unveiled a plan to restructure the state's five public pension systems. "I think there does have to be accountability on the part of the employers. But we're working on that and I can see a reasonable opportunity to phase that in."

House Republican Leader Tom Cross of Oswego contended that approach amounts to a hike in property taxes because it will send school districts scrambling to find dollars in already tight budgets. Education officials say districts that can't or won't ask taxpayers for more money will be forced to make cuts in the classroom.

"There is no way around it, it's either cut the education budget, or it's a property tax increase because school districts have nowhere else to get that money," said Ben Schwarm, associate executive director of governmental relations for the Illinois Association of School Boards.

The demand to pay up comes as schools are struggling to deal with several years of budget cuts and late payments under Quinn, including less money for bus transportation and fewer dollars in general state aid payments.

"He's essentially freezing our revenue and increasing our cost," said Dean Casper, former president and member of Community Consolidated School District 146, which serves parts of Tinley Park, Orland Park and Oak Forest. "It's akin to tying the school districts' hands and feet together and throwing them over the side of a boat and telling them to swim for it."

Quinn said he "strongly, vigorously" disagrees that his plan would result in property tax increases, arguing that some schools could tap into their reserve funds to cover the cost. Quinn said a handful of schools already pay pension benefits for their workers, and others would have to budget accordingly.

Further, Quinn said, retirement benefits could become more affordable for schools to shoulder if broader pension reforms are successful in driving down overall costs. On Friday, Quinn proposed that workers increase their contributions by 3 percent, cost-of-living increases be reduced and the retirement age be raised to 67. Quinn estimated that if enacted, the changes would save $65 billion to $85 billion by 2045.

"If we are able to enact these benefit changes, that's going to save every school district a significant amount of money," Quinn told the Tribune editorial board.

Supporters of the idea, including Senate President John Cullerton, D-Chicago, said phasing the funding shift in over several years will give districts "time to consider how to assume that responsibility appropriately."

But the lack of immediate details did little to assure education officials who say the governor is overestimating the ability of schools to absorb the extra pension costs.

"These are scary times for schools and it really ought to be scary times for parents as well," said Mike Chamness, spokesman for the Illinois Association of School Administrators. "We realize the economy is bad, but the cuts have just kept coming for schools and there's a certain point where you can't cut any more without reducing the quality of education."

Quinn aides said the savings that state government would realize from shifting retirement costs back onto school districts is not required for the governor to hit his goal of wiping out the $83 billion pension system debt.

That would make such an idea easier to jettison if there's too much push-back from lawmakers. The governor's idea puts legislators into a tricky situation: Most know they need to be able to tell voters they supported pension reform, but they also don't want the heat that could come from being blamed for a major property tax increase back home.

Rep. Elaine Nekritz, D-Northbrook, said there is no consensus on cost-shifting among lawmakers in a group looking at pension solutions.